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April 13, 2006
Enron and the Press
This is an item which won't interest most people, I'm afraid. But it's something that I've thought a lot about. When the Enron scandal broke in 2001, there was a lot of breast beating about how business journalists failed, how the press should have dug deeper and not drunk the Kool-Aid, how it should have been clear to anyone with even half a brain that Enron was a complete fraud.
Well, maybe. But I find it remarkable that 5 years later that the government prosecutors, armed with subpoena power and testimony from several inside players, have still not been able to convincingly nail Skilling and Lay to the wall. I have no idea whether Skilling and Lay will eventually be found guilty or innocent. But the lack of a smoking gun, even now, does help explain why it was so hard for the press to blow the whistle on Enron in 2000 and 2001.
I got the same impression, frankly, from reading all the books on Enron. None of them were able to convincingly say whether Skilling and Lay were dishonest or simply over-optimistic, blinded by their own belief in the New Economy. I'm not sure even Skilling and Lay could tell.
In the end, it strikes me that the real culpability in this drama lies with the accounting firm, Arthur Anderson, who were charged with being the voice of prudence and failed at that task.
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Yes, they failed as independent arbiter, but this was because they became the lapdog of management. Or do you think it was only sloppiness and incompetence on their part? I think not.
Posted by: Lord at April 14, 2006 01:54 PM
The real villian was Fastow. Skilling approved the deals to meet Wall Street's forecasts (schol kids that think a business is supposed to increase it's "bottom line" 10% per QUARTER.) Lay wanted to be the omnicient big shot who knew everything about everything. Either way, they all "robbed" employees' 401Ks, effectively ruining peoples' lives forever. For that they should go to jail forever.
Posted by: William F Cummings, III at May 16, 2006 02:14 PM
Is this the same Arthur Andersen which the Supreme Court unanimously found was wrongly convicted in the Enron case?
Those who invested in wildly-overpriced Enron rather than dull and boring index funds lost all their money. Too bad.
On the other hand, feel happy for the short-sellers.
Posted by: Thomas Esmond Knox at June 1, 2006 12:47 AM
Enron players were vilified because they broke moral rules -- not legal ones.
(The actual laws by which execs from Enron and other corporations have been punished were embarrassingly irrelevant to the actual gravity of their misbehavior.)
Nobody but journalists are in a position to detect and alert the public (and, more directly relevant, law-makers) in such situations.
Posted by: superf88 at December 14, 2006 11:06 AM